The stock dropped by about seven per cent during morning trading, significantly underperforming both the broader Nasdaq index and other major technology companies. The decline reflects mounting investor anxiety over Google's ability to maintain its leadership position in the rapidly evolving AI industry.
The latest pressure on Alphabet comes amid a series of high-profile departures from its artificial intelligence division, raising questions about talent retention at a time when competition among AI companies has intensified.
Among the most notable exits is Noam Shazeer, Google's Vice President of Engineering and one of the co-leads behind the company's Gemini AI models. Shazeer announced last week that he would be leaving Google to join OpenAI, a move that surprised many industry observers given his central role in the development of Google's AI strategy.
His departure is particularly significant because it comes less than two years after his return to the company. In 2024, Google brought Shazeer and fellow researcher Daniel De Freitas back into its DeepMind division through a strategic partnership with Character.AI, the startup both men founded after leaving Google in 2021.
The timing of Shazeer's exit has attracted additional attention as it follows closely on the heels of Google's recent unveiling of new artificial intelligence products, including the Gemini 3.5 Flash model and the Gemini Spark AI agent, during the company's annual I/O developer conference.
Investor concerns deepened further after another prominent AI figure, John Jumper, announced his departure from DeepMind on Friday. Jumper, who served as DeepMind Vice President and Engineering Fellow for nine years, revealed plans to join rival AI company Anthropic.
Jumper is widely respected within the scientific community for his groundbreaking work on AlphaFold, the artificial intelligence system that revolutionized biological research by accurately predicting protein structures. The technology has been credited with accelerating scientific discoveries and reducing years of laboratory work.
His achievements earned international recognition, including a Nobel Prize shared with DeepMind Chief Executive Officer Demis Hassabis in 2024.
The market reaction was also influenced by comments from Microsoft Chief Executive Officer Satya Nadella during a weekend interview with The Wall Street Journal. Nadella argued that the AI industry is becoming increasingly commoditized and suggested that companies should avoid excessive dependence on what he described as "AI giants."
His remarks have fueled debate over whether large technology firms can sustain a competitive advantage through massive investments in artificial intelligence infrastructure and model development.
Alphabet has committed enormous resources to the AI race, reportedly raising approximately $141 billion through debt and equity financing since October. The company has been investing heavily in advanced AI models, data centres, semiconductor technology and cloud infrastructure as it seeks to strengthen its position against competitors such as OpenAI, Microsoft, Anthropic and Meta.
However, some investors are becoming increasingly cautious about whether these investments will deliver long-term returns. If AI models become more affordable, widely available and interchangeable, companies may find it harder to differentiate themselves, potentially putting pressure on profit margins and reducing the value of expensive infrastructure investments.
Adding to Monday's challenges, some Google users reported service disruptions affecting Gmail and YouTube. While the outages appeared unrelated to the stock decline, they contributed to a difficult day for the company as it faced heightened scrutiny from investors and market analysts.
Despite the setbacks, Alphabet remains one of the world's most influential technology companies, with AI continuing to be a central pillar of its long-term growth strategy. Nevertheless, the latest developments highlight the increasingly fierce battle for talent, innovation and market dominance in an industry that is evolving at an unprecedented pace.